Tremor Video launches IPO, prices shares lower than expected (Update)

Tremor Video, a large online video network, will go public on Thursday in an IPO that some observers believe could prove a bellwether for the overall ad tech market.

Update: Tremor shares opened at $10.50 but were trading around $8.80 by mid-afternoon on a day when overall markets are up slightly.

The company, which filed to go public in late May, will price 7.5 million shares at $10, a figure that is below the $11 and $13 that investors had anticipated. Tremor, which will trade on the NYSE under TRMR, is also granting underwriters an option to purchase 1,125,000 additional during the next 30 days.

The lower-than-expected IPO price may reflect a choppy investment climate during a week where shares fell sharply on hints that the Federal Reserve may end its long-running loose monetary policies. But the price may also reflect a tense market for ad tech in general, which is about using technology to target online display and video ads.

In recent years, venture capitalists and other investors have bet heavily on the still-emerging market, and the ad tech field has become convoluted and crowded with a host of companies — many of which are losing money and cutting jobs. Tremor itself last year lost $16.4 million on revenue of $105.2 million, bu this ratio and the company’s gross margins have been improving significantly. Video is considered a bright spot in the ad tech industry because it commands higher ad rates than conventional interent ads.

A host of other ad tech companies, including Tremor rivals YuMe and Adapt.tv, are also expected to go public this year.

We’ll update this story later on Thursday with market reaction and closing share price.

(Disclosure: GigaOM executive editor, Ernie Sander, is a family member of Tremor Video’s CEO; Sander did not edit this story)